Penalty – deliberate or careless?

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This case breaks no new ground, but re-states the definitions of the different penalty categories.

The case concerned Sacutia Healthcare Ltd, and considered the taxpayer’s behaviour in claiming input tax in relation to invoices held to be deficient, and unsatisfactory export evidence.

The Tribunal commented:

62.           We note Sacutia’s submissions that the errors should be considered at best to have been the result of careless behaviour. We consider that, in order for an action to be careless, a taxpayer must have a reasonable belief that the information they are providing is accurate.

63.           However, we consider that a taxpayer cannot be regarded as simply careless where they take no steps to ensure accuracy or check the accuracy or completeness of information as that taxpayer cannot have a reasonable belief that the information provided is accurate. Engaging an accountant does not automatically ensure accuracy, and so such engagement cannot on its own amount to taking adequate steps to ensure accuracy, particularly where the taxpayer does not ensure that the accountant is provided with accurate information and does not check the information that is then produced by the accountant. Penalties cannot be escaped simply because a taxpayer (or the person acting on their behalf, in the case of a company) is not a “detail person”

The Tribunal went on to quote HMRC guidance (CH81160) on ‘deliberate and concealed,’ without question (para 66):

A deliberate and concealed inaccuracy is the most serious level of evasion. It occurs where a document containing a deliberate inaccuracy is given to HMRC and active steps have been taken to hide the inaccuracy either before or after the document has been sent to us.

As well as deliberately recording an inaccuracy, the person has to take active steps to cover their tracks by making arrangements to conceal the inaccuracy.

However, the Tribunal also commented that, in order to apply a deliberate penalty, HMRC have the obligation to demonstrate how the taxpayer’s behaviour warrants such categorisation. Also HMRC have to demonstrate where the taxpayer concealed his deliberate inaccuracy. In this case, HMRC did establish ‘deliberate,’ but not ‘concealed.’ 

About Les Howard


Hi, I am a VAT Consultant, working mainly with charities. I am based in Cambridgeshire

I have over 20 years experience in VAT, and am currently also a part-time member of the Tax Tribunals.


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17th Jan 2019 14:54

Furthermore, the standard of proof for dishonesty/fraud allegations (which is what an allegation of deliberate failure is) is quite high and the allegation must be made fairly per the case in the link below:

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